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An Aussie Rate Cut!

* Dollar rally continues... * Eurozone data prints weak... * Oil sees a HUGE drop! * WAKE UP, China! ** An Aussie Rate Cut! Good day... And a Wonderful Wednesday to you! I'm shaking my head this morning and wondering what its going to take to get this dollar rally stopped before it gets out of hand, and the exports get killed once again. And if the exports get killed, the Current Account Deficit begins to swell again, and so on and so on. This dollar strength is not good for our economy at this stage, but that's what we have, and I'm wondering who wrote the book of love! I recall the last time we saw the dollar smokin' hot like this, 2005... I sure hope the nasty emails to me don't start again... You should have seen some of these emails, they would embarrass a sailor! OK, that's just a saying, I'm not picking on sailors! You have to say these disclaimers or else there will be someone that gets upset and fires off a nasty email. What's happened in society that email has allowed people to say things they would never say to someone's face? It's brought out the Mr. Hyde in people, for sure!...

Published Wed, Sep 09 2008 8:28 AM by Chuck Butler

Filed under: Australia, Dollar, Oil, Commodities, China, Euro, GDP, Eurozone

Export Growth Drives GDP!

* GDP grows 3.3%! * But it's a one and done for GDP! * Plenty O' data today... * A Wall Street Journal interview... ** Export Growth Drives GDP! Good day... And a Happy Friday to one and all! A Fantastico Friday in my books because it will be the end of a bad week for yours truly, and the start of a 3-day Labor Day Holiday weekend! YAHOO! Another storm, Gustav, is headed for the Gulf Coast, and maybe Louisiana, which wouldn't be good. So my thoughts are with those in the path of Gustav. Gustav is causing some problems for the price of Oil, this bubblin' crude, black gold, Texas tea, has posted its weekly gain in two months! The rise in Oil prices has lit a fire under Gold, and put pressure on the dollar once again, along with inflation pressures to say the least! The dollar pushed the euro and other currencies lower yesterday after the 2nd QTR GDP surprised on the upside, posting a gain of 3.3% annualized... I told you twice this week that 2nd QTR GDP would be stronger and yesterday, I laid out the scenario that the boost would come from: 1. stimulus checks, and 2. export growth because of the weak dollar....

Published Fri, Aug 08 2008 9:23 AM by Chuck Butler

Filed under: Dollar, China, Gold, Euro, Alan Greenspan, GDP, Eurozone, Renminbi, Hurricane Gustav, Exports

Dollar range bound...

* Dollar range bound... * German confidence falls... * Aussie and NZD continue to slide... * US to maintain pressure on Chinese... ** Dollar range bound... Good day... Chuck had a rough night, so he decided to stay home and try to get some rest. The Pfennig will be pretty short this morning, as I want to try and get it out as close to the regular time as possible. The currency markets were fairly calm yesterday, with the dollar staying in a pretty tight range before rallying some in early trading this morning. The Euro has lost some ground in European trading as German business and consumer confidence fell more than economists forecast. The Ifo institute's business climate index dropped to a three year low in July and consumer sentiment slumped to the lowest level in five years. Some currency traders pointed to these latest reports as further proof Europe is slipping into recession and that the ECB will need to cut rates before year end. It is obvious by now that the economies of Europe are weakening, and growth will not be able to match last years numbers. But I still believe Trichet and the other voting members of the ECB will continue their hawkish bias, and I don't expect any interest rate moves until sometime next year. This should keep the Euro from falling dramatically away from these current levels....

Published Tue, Aug 08 2008 9:36 AM by Chuck Butler

Filed under: Australia, Dollar, China, Home Sales, New Zealand, Germany, FOMC

A Downward Revision of Eurozone Growth...

* Euro rally ends quickly! * Housing Data continues to be bad... * OECD wants Norway's rates increased... * The Aden Sisters on a Wednesday! ** A Downward Revision of Eurozone Growth... Good day... And a Wonderful Wednesday to you! I'm sitting here wondering what to write about this morning, and on the radio is a classic song by Led Zeppelin, Dazed and Confused... Seems quite apropos, eh? I say this because that's what I've been for the last month, as the dollar got up from its death bed, and there's not a sign of any medicine that was prescribed had been taken! Oh well, why would I think that things would change for me at this stage of my life, I've been dazed and confused for a long time! HA! I'm sure that's what a lot of people are saying right now anyway... The euro rebounded over 1-cent yesterday, but that rebound has been wiped out completely in the overnight markets... There's just no lasting power in any currency rally VS the dollar right now. And as I keep going saying, this is reminding me so much of 2005 when the dollar covered up its pimples and posed for GQ, only to see the pimples pop through the makeup by year-end....

Published Wed, Aug 08 2008 9:00 AM by Chuck Butler

Filed under: Currencies, Dollar, China, Gold, Euro, Japan, Norway, Home Prices

Inflation & Jobless Rate Soars!

* Dollar wages war on euro! * Pulling the wool over our eyes... * A Gold discussion... * 4-weeks of selling renminbi... ** Inflation & Jobless Rate Soars! Good day... And a Happy Friday to one and all! It's been 3 weeks since I last started a Friday with that note. I hit every red light this morning on my way to work, which led me to think aloud in the parking lot, that this isn't going to be a Fantastico Friday... And when I turned on the currency screens, after reaching my desk, I could see why I thought those negative thoughts... It's getting ugly... Yesterday, I was busy with my head down working on something, when Chris Gaffney yelled across the trading desk, "Hey, Chuck, what happened to the euro?" I looked up to see the euro had lost 1-cent in a matter of 20 minutes... But that's not the end... This morning, the euro has given up another 1-cent, and now trades with a 1.47 handle. Just what the heck is going on here?...

Published Fri, Aug 08 2008 9:34 AM by Chuck Butler

Filed under: Dollar, Inflation, China, Gold, Jobs, Renminbi

Central bank intervention is the reason...

* Central Bank intervention is the reason... * Busy data week... * Australia's central bank to mirror the BOE?... * China to slow appreciation ... ** Central bank intervention is the reason... Good day... I know most of you opened the Pfennig up this morning hoping to get a blast of Chuck's witty writing style. Well the airlines arranged for Chuck to stay in San Francisco a little longer, so you'll have to wait another day. The currency markets continued to get hammered by the US$ on Friday with the dollar index climbing all the way back above 76, a level we haven't seen since mid February. The dollar did sell off a bit in early European trading, but it has started to climb again as I write. Several readers sent me an excellent opinion piece by James Turk which appeared on GoldMoney's website. Mr. Turk points to central bank intervention as a major reason for the recent dollar strength. The article agrees with what I was saying last week; that the dollar has no fundamental reason to be rallying. The reports and news out of the US have not been favorable to the greenback, and the twin deficits in the US continue to soar out of control. I mentioned that the recent moves of the dollar smacked of intervention, as the dollar only wanted to move in one direction, ignoring any data which would typically send it back down. Turk points to some data which backs up this intervention theory....

Published Mon, Aug 08 2008 9:32 AM by Chuck Butler

Filed under: Australia, Dollar, China, The Fed, Eurozone, Renminbi, Olympics, James Turk, Central Bank

Nowhere to hide...

* Nowhere to hide... * Trichet sounds dovish... * US fundamentals haven't changed... * Olympics open up in China.. ** Nowhere to hide... Good day...The dollar continued to take no prisoners in its move higher. The newly strong greenback was up vs. every currency we track yesterday, and has rallied over 3% vs. the major currencies over the past week. It has been a pretty tough week for yours truly, as I have tried to make sense of this dollar rebound. Chuck can't get back to St. Louis quick enough! The dollar started its big move just after the Trichet gave his statement on his views of the European economy. The ECB left rates unchanged, but Trichet said economic growth will be 'particularly weak' through the third quarter, suggesting policy makers will be wary of raising interest rates again to curb inflation. While the ECB's decision to raise borrowing costs last month was justified by the inflation threat, risks to growth 'are materializing,' Trichet told reporters. 'Overall, downside risks prevail.'...

Published Fri, Aug 08 2008 9:02 AM by Chuck Butler

Filed under: China, European Central Bank, Trichet, Jobs, Renminbi, Olympics

Dollar continues to slide...

* Dollar continues to slide... * Housing bailout passes congress... * Chinese Renmibi falls... * Aussie dollar peaked?... ** Dollar continues to slide... Good day... And welcome to the last week of July. I spent the past week fishing with my son and father in law up in Manitoba, Canada. We had some great weather, and caught an absolute ton of Walleye and Pike. My son caught a Pike almost as long as he is tall. Just a great guys trip; but enough about my time off, I'm back at work now, so lets get to the currency markets. The dollar continued to slide throughout Friday's trading as concern of further US credit losses trumped some negative data released in Europe. The dollar dropped for a second day against the Euro after a story in the Financial Times quoted Gary Stern, president of the Federal Reserve Bank of Minneapolis, saying the credit crunch will worsen. Nothing new here, but as Chuck stated in Friday's Pfennig, currency traders continue to play the game of "Who's Data is Worse" with the US economic data coming in even worse than the rest of the world....

Published Mon, Jul 07 2008 9:02 AM by Chuck Butler

Filed under: Australia, Dollar, China, Bailout, Renminbi, Home Prices, Foreclosures, Fannie Mae, Freddie Mac

Where There's Smoke...

* Fed Head Yellen comes clean! * $75 Billion in Capital needed? * Another risk even? * Higher inflation for Brazil... ** Where There's Smoke... Good day... And a Terrific Tuesday to you! I'm writing from home today as I have to deal with a catalytic converter this morning before heading into work. Writing from home is always a challenge in that I don't have my trading screens going with news scrolling continuously... But... I carry on despite my challenges! The euro recovered a bit yesterday after last Thursday's tailspin... And the recovery was smack dab in the face of some weak economic news from Germany! Here's what got the euro going and moving up once again yesterday......

Published Tue, Jul 07 2008 9:55 AM by Chuck Butler

Filed under: Dollar, Brazilian Real, China, Recession, Euro, Consumer Confidence, Bank of England, Carry Trade, Janet Yellen

Removing Fed Rate Hike Bets...

* The euro rallies 1-cent! * U.S Data continues to be a drag... * Canada's Carney underpins the loonie... * RBS issues a warning! **Removing Fed Rate Hike Bets... Good day... And a Happy Friday to one and all! Looks like it could be a Fantastico Friday as traders are Finally coming around to Chuck's way of thinking regarding Fed rate hikes... And as traders remove their bets for aggressive Fed rate hikes, the luster begins to fade on the dollar rally. The meetings are over for this week (they start up again next week!), YAHOO! I get to spend the day on the trading desk... I've missed everyone! OK... Front and Center this morning, we have the euro trading 1-cent higher, knock, knock knocking on Heaven's Door, I mean, the 1.56 handle. As I said in the intro, it appears that traders don't have the stomach to hold on to their bets that the Fed will aggressively raise interest rates this year. Recall, the other day, I told you that the bets were ratcheting up and had reached 75 BPS of rate hikes this year... I doubt we have any... In fact, as I told you the other day too, I believe that when the dust settles on the fact that the Fed isn't going to raise rates, things will have gotten so bad here that the Fed will be entertaining thoughts of cutting rates again!...

Published Fri, Jun 06 2008 9:20 AM by Chuck Butler

Filed under: Brazilian Real, Oil, China, Euro, Carry Trade, FOMC, Bank of Canada, Royal Bank of Scotland